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A VC’s Thoughts on the Future of Digital

Posted by Rich Cherecwich on November 7th, 2012 at 2:18 pm

Venture capital is always a hot topic in digital media. After all, heavy investment from the VC community has brought us now ubiquitous online platforms like Facebook, Twitter, Tumblr and Foursquare. VCs, by their nature, are always looking to the future, trying to get a sense of which digital companies will resonate with consumers and eventually become viable businesses.

Fred Wilson, managing partner at Union Square Ventures and one of the most well-known VCs (thanks to his A VC blog) sat down for an ad:tech keynote discussion and shared some insight into his investing process, and where he thinks digital media is going.

Here are a few nuggets from Wilson’s conversation with Simulmedia CEO Dave Morgan:

Build network and audience first.
Throughout the discussion, Wilson emphatically endorsed a business plan where companies build scale before turning their focus on monetization. “If you spend all of your time on monetizing, you may never get the scale. That’s why this order makes sense,” he said.

Different user experiences will change advertising.
Old display models will fade away, which will force agencies to evolve and develop new ad solutions. “People say they hate advertising. People don’t hate advertising. They hate bad advertising,” Wilson said. “They hate interruptive advertising, and poorly targeted advertising.”

Native ad models will succeed.
One possible solution for ad success is to deliver ads as part of the content experience, similar to what Twitter is doing. Wilson felt other socially-driven companies could replicate the model, turning his sites on YouTube. Rather than rely on ugly overlays, brands should upload their video ads to YouTube, just as consumers upload their own videos. Marketers will then pay for their videos to be promoted on certain channels.

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